News and Analysis • Volume 13 • Number 1 • March 2009

New US Trade Agenda Raises Questions about Doha Round

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The 2009 Trade Policy Agenda released by the US Trade Representative in March offers a first glimpse on President Obama’s priorities. Despite a lack specifics, the blueprint makes clear that the administration is not envisaging fresh trade concessions, at least in the short term.

Overall, the agenda reflects President Obama’s goal to steer the US economy to a greener and more socially accountable path. There is a greater emphasis on use of trade as ‘part of a tool kit’ to respond to environmental challenges, such as climate change or the depletion of fisheries and other natural resources, but no details on how this would be done. The general approach is clear, however: “We should ensure that climate policies are consistent with our trade obligations, but we also should be creative and firm in assuring that trade rules do not block us from tackling this critical environmental task.”

The language on labour issues is also relatively vague. On the domestic front, the government should assist those negatively affected by global competition, while internationally US trade policies should “build on the successful examples of labour provisions in some of our existing agreements” and ensure that “competitiveness is not based on the exploitation of workers.”

Multilateral Trade: Need to Correct Imbalances

While the trade agenda confirms the United States’ commitment to the WTO, it emphasises that the Obama administration “will aggressively defend our rights and benefits under the rules-based trading system.”

It also refrains from calling for a quick conclusion to the Doha Round, noting instead that a “strong, market-opening agreement for both goods and services would be an important contribution to addressing the global economic crisis.” The US is committed to working on a deal that would deliver such an outcome, but the policy agenda warns that “it will be necessary to correct the imbalance in the current negotiations in which the value of what the United States would be expected to give is well-known and easily calculable, whereas the broad flexibilities available to others leave unclear the value of new opportunities for our workers, farmers, ranchers and businesses.”

This caveat has some trade negotiators worried that the Obama administration might not be willing to proceed on the basis of the latest chairs’ texts on agriculture and industrial market access, which key US farming, manufacturing and services coalitions have strongly rejected. Reiterating concerns they had already expressed in December, the American Farm Bureau, the National Association of Manufacturers and the Coalition of Services Industries wrote to President Obama on 24 February that the chairs’ texts had “produced a badly imbalanced result and we do not view them as the basis for advancing the negotiations.” In addition, the business groups said that the Doha Round could “not proceed, let alone succeed, until the negotiating texts are revised to provide balance and greater ambition from the advanced developing countries.” Brazil, for one, has warned against any radical change of tack with regard to developed and developing country commitments. Its WTO Ambassador Roberto Azevedo told the Trade Policy Review Body on 9 March that his government considered the texts as a “good basis for the resumption of the negotiations. In light of the ongoing economic crisis, the gains that we could obtain from the package on the table are not to be thrown away.”

Regional Deals and TPA

The trade agenda gives few details on how the administration plans to shepherd the three free trade agreements still awaiting congressional approval. Instead, it promises extensive outreach and public discourse on “whether these agreements appropriately advance the interests of the United States and our trading partners.” The administration hopes to move the Panama FTA ‘relatively quickly’ and to establish ‘benchmarks for progress’ on the Korean and Colombian agreements. What those benchmarks would entail is still unclear, although there is wide-spread speculation that labour rights will feature prominently, particularly with regard to the Colombian pact. A coalition of Democrat lawmakers has objected to all three agreements as they currently stand (see opposite).

Closer to home, President Obama’s team will “work with Canada and Mexico to identify ways in which NAFTA could be improved without having an adverse effect on trade.” New bilateral and regional FTAs will be considered “when they promise to deliver significant benefits consistent with our national economic policies.” For the moment, however, new negotiations are decidedly on the back burner. Until the new US Trade Representative has reviewed the broader picture of US trade priorities, ongoing talks with Malaysia have been postponed, as has US participation in the Trans-Pacific agreement, which is to build on an existing FTA between Brunei Darussalam, Chile, New Zealand and Singapore.

Similarly, the administration does not appear in a hurry to secure to seek ‘trade promotion authority’ for President Obama. TPA, also called fast-track, allows the executive to negotiate trade agreements and submit them to Congress for a simple ‘yes’ or ‘no’ vote without amendments. Although conventional wisdom considers TPA fundamental for international negotiations, a number of analysts think that the authority can and will be quickly granted if a good enough deal is on the table. The administration says it will only ask for renewed trade negotiating authority after extensive consultation with Congress, and “making it clear to the American people what we intend to do with it.”

Trade Preferences

The Obama administration looks poised to continue a trend already evident under President Bush: trade preference programmes coming up for review are likely to be renewed, but also reformed so as to “concentrate benefits more effectively on the poorest countries and those that need the margin of preference to compete.” However, there appears to be little chance of Bolivia recapturing its benefits under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) any time soon as relations between the two countries have deteriorated further since President Bush suspended Bolivia’s trade preferences in mid-December (see page16).